U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[x]     QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE
        SECURITIES EXCHANGE ACT OF 1934

        For the quarterly period ended: June 30, 1998

[ ]     TRANSITION REPORT PURSUANT SECTION 13 OF 15(D) OF THE
        SECURITIES EXCHANGE ACT OF 1934

        For the transition period from ___________ to ________

                         Commission file number 0-17232

                           CAPITAL RESERVE CORPORATION
        (Exact name of small business issuer as specified in its charter)

          COLORADO                                              84-0888594
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)

           6732 WEST COAL MINE AVENUE, #504, LITTLETON, COLORADO 80128
                    (Address of principal executive offices)

                                 (303) 794-3155
                           (Issuer's telephone number)

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                          if changed since last report)

        Check  whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. YesNo _X_

        State the number of shares  outstanding of each of the issuer's  classes
of common equity, as of the last practicable date:

                     546,045 SHARES OF CLASS A COMMON STOCK, NO PAR VALUE, AS OF
                                 AUGUST 14, 1998

        Transitional Small Business Disclosure Format (check one);  Yes__ No _X_
Exhibit index on page 9                                       Page 1 of 12 pages

                         

<PAGE>









                            Independent Accountants' Report


Board of Directors

Capital Reserve Corporation



The accompanying consolidated balance sheet of Capital Reserve Corporation as of
June 30, 1998,  and the related  consolidated  statements of operations  for the
three  months and six months  ended  June 30,  1998,  and cash flows for the six
months ended June 30, 1998, were not audited by us, and  accordingly,  we do not
express an opinion on them.

Consistent with the requirements of Item 310(b) of Regulation S-B management has
elected to omit  substantially  all of the  disclosures  required  by  generally
accepted accounting principles.  If the omitted disclosures were included in the
financial  statements,  they might  influence the user's  conclusions  about the
Company's  financial  position,  results  of  operations,  and its  cash  flows.
Accordingly,  these financial  statements are not designed for those who are not
informed about such matters.




/s/Miller and McCollom, CPA's
Miller and McCollom, CPA's









Denver, Colorado
August 5, 1998



                                           2

<PAGE>

<TABLE>

<CAPTION>

                              CAPITAL RESERVE CORPORATION
                              CONSOLIDATED BALANCE SHEET
                                     JUNE 30, 1998

                                      (Unaudited)


<S>                                                                         <C>    

ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                                        $   1,476
  Accounts receivable                                                                  5,000
                                                                            ----------------
    Total currents assets                                                              6,476

                                                                                           -
                                                                            ----------------
Investments

TOTAL ASSETS                                                                       $   6,476
                                                                            ================


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
 Accounts payable and accrued liabilities                                           $  5,875
    Total current liabilities                                                          5,875
                                                                            ----------------

STOCKHOLDERS' EQUITY
 Class A common stock                                                              3,138,102
 Class B preferred stock                                                              50,000
 Accumulated deficit                                                             (3,187,501)
                                                                            ----------------

                                                                                         601
                                                                            ----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                           $ 6,476
                                                                            ================

</TABLE>

              See accountants' report and notes to financial statements.


                                           3

<PAGE>

<TABLE>
<CAPTION>


                              CAPITAL RESERVE CORPORATION
                         CONSOLIDATED STATEMENTS OF OPERATIONS

                                      (Unaudited)



                                     Three Months Ended             Six Months Ended
                                          June 30,                      June 30,
                                 --------------------------   ----------------------------


                                    1998             1997            1998            1997
                               ---------------   ------------   --------------   -------------

Revenues
<S>                            <C>               <C>            <C>              <C>        
  Insurance residuals                 $    434    $     4,519      $     2,311     $     8,555
  Consulting revenues                        -              -                -           2,500
  Interest and dividends                     -            526               15           1,773
  Investment (loss) gains                5,778       (10,498)          (2,302)          69,358
  Loss on sale of assets                     -       (16,168)         (13,813)        (16,168)
  Other                                (6,166)          2,000            8,869          11,950
                               ---------------   ------------   --------------   -------------

    Total revenues                          46       (19,621)          (4,920)          77,968

Expenses
  General and administrative             3,473         45,574           16,279         170,350
                               ---------------   ------------   --------------   -------------

Net (loss)                          $  (3,427)     $ (65,195)       $ (21,199)      $ (92,382)
                               ===============   ============   ==============   =============

Net (loss) per common share        $     (.01)   $       (.12)   $       (.04)   $       (.17)
                               ===============   ============   ==============   =============




</TABLE>




              See accountants' report and notes to financial statements.


                                           4

<PAGE>

<TABLE>
<CAPTION>


                              CAPITAL RESERVE CORPORATION
                         CONSOLIDATED STATEMENTS OF CASH FLOWS

                                      (Unaudited)


                                                                      Six Months Ended
                                                                          June 30,
                                                               ---------------------------------

                                                                    1998               1997
                                                               ---------------     -------------
<S>                                                            <C>                 <C>
Operations activities:
  Net loss                                                          $ (21,199)        $ (92,382)
                                                               ---------------     -------------
  Reconciling adjustments:
     Depreciation and amortization                                         964             5,313
     Loss (gain) on investments                                          2,302          (69,358)
     Loss on sale of assets                                             13,813            16,168
     Partnership (loss) income                                          11,175                 -
   Other                                                                 8,047                 -
Changes in assets and liabilities:
  Other current assets                                                 (4,649)             8,927
  Accounts payable and accrued liabilities                            (43,137)         (155,504)
                                                               ---------------     -------------

     Total adjustments                                                (11,485)         (194,454)
                                                               ---------------     -------------

Net cash used for operating activities                                (32,684)         (286,836)
                                                               ---------------     -------------

Investing activities:
  Investments in common stock                                          (1,893)          (38,674)
  Sales of investments in common stock                                  21,462           143,382
  Proceeds from sale of assets                                           5,843            16,500
  Purchase of property                                                       -           (8,109)
                                                               ---------------     -------------

    Net  cash provided by investing activities                          25,412           113,099
                                                               ---------------     -------------

Net change in cash and cash equivalents                                (7,272)         (173,737)
Cash and cash equivalents at beginning of period                         8,748           229,375
                                                               ---------------     -------------

Cash and cash equivalents at end of period                         $     1,476          $ 55,638
                                                               ===============     =============

</TABLE>

              See accountants' report and notes to financial statements.


                                           5

<PAGE>

                              CAPITAL RESERVE CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     JUNE 30, 1998

                                      (Unaudited)

NOTE 1 - MANAGEMENT'S STATEMENT

In the opinion of management,  the accompanying unaudited consolidated financial
statements  contain all  adjustments  (all of which are normal and  recurring in
nature)  necessary to present fairly the financial  position of Capital  Reserve
Corporation  as of June 30, 1998,  and the results of  operations  for the three
months and six months ended June 30,  1998,  and 1997 and cash flows for the six
months  ended  June 30,  1998,  and 1997.  The Notes to  Consolidated  Financial
Statements  which are contained in the Form 10-KSB should be read in conjunction
with these consolidated financial statements.

NOTE 2 - RELATED PARTY TRANSACTION

In March  1998,  a  corporation  with  which an officer  of the  Corporation  is
affiliated,  purchased the Corporation's  insurance  residual for $15,000.  This
amount is included in other revenue in the accompanying financial statements. At
June 30, 1998, the  Corporation  had received  $10,000 in cash and the remaining
balance  is  included  in  accounts  receivable  in the  accompanying  financial
statements.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (ITEM 303)

LIQUIDITY AND CAPITAL RESOURCES

Working  capital at June 30, 1998, was $601, as compared to ($9,996) at December
31, 1997.  Since the Corporation has no significant  source of revenue,  working
capital will continue to be depleted by operating expenses.  Furthermore, if the
Corporation should generate an operating loss for the current year comparable to
the loss incurred for the year ended December 31, 1997, a substantial portion of
the Corporation's remaining cash and working capital will be depleted.

Current  liabilities  were  $8,875 at June 30,  1998 as  compared  to $49,012 at
December 31, 1997.



                                           5

<PAGE>



RESULTS OF OPERATIONS

The  Corporation  is in the process of suspending its  operations.  As such, the
Corporation has disposed of most of its assets and applied the proceeds from the
sale of those assets to decreasing the  Corporation's  outstanding  liabilities.
While the  Corporation  has  continued  to  receive  income  (and  losses)  from
insurance residuals,  interest and dividends,  and investments,  these items are
not a  significant  source of income  compared  to the  Corporation's  operating
expenses.

The  Corporation  had total  revenues of ($4,920) and $77,968 for the six months
ended  June 30,  1998  and  1997,  respectively.  As the  result  of the sale of
marketable  securities,  for the six months ended June 30, 1998, the Corporation
recorded an  investment  loss of $2,302,  as compared to an  investment  gain of
$69,358 for the same period during 1997. The  Corporation  also generated  other
revenues of $8,869 for the six months ended June 30, 1998, which was largely due
to the sale of the  Corporation's  insurance  residual to a related  party.  See
"Item 1.  Financial  Statements  - Note 2." During the six months ended June 30,
1998, the Corporation incurred a loss on the sale of assets, attributable to the
sale of the  Corporation's  furniture and fixtures to an unrelated party, in the
amount of $13,813,  compared  to a loss of $16,168  for the same  period  during
1997. See "Item 1. Financial Statements."

General and  administrative  expenses  for the six months  ended June 30,  1998,
include legal expenses of $3,732.  General and  administrative  expenses for the
six months ended June 30, 1998, also include:  (i) rent expenses of $2,806; (ii)
accounting  and  auditing  expenses  of $5,875,  entertainment  and  development
expenses of $697, and insurance expenses of $836.

As compared to the six months  ended June 30, 1997,  operating  expenses for the
current period decreased by 91%. The net loss from continuing operations for the
six months  ended June 30, 1998,  decreased  by 77% compared to 1997,  generally
attributable to a decrease in expenses and total revenues.


                              PART II - OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS (ITEM 103)

               Not Applicable.

ITEM 2.        CHANGES IN SECURITIES

               Not Applicable

ITEM 3.        DEFAULTS UPON SENIOR SECURITIES

               Not Applicable


                                           6

<PAGE>



ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

               Not Applicable

ITEM 5.        OTHER INFORMATION

               Not Applicable.



                                           7

<PAGE>



ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K (ITEM 601)
<TABLE>
               A)     EXHIBITS
<CAPTION>

        REGULATION S-B                                                      CONSECUTIVE
            NUMBER                 EXHIBIT                                PAGE NUMBER
                 <S>               <C>                                       
              2       Plan of purchase, sale, reorganization
                      arrangement, liquidation, succession                      N/A
              3(i)    Articles of Incorporation as Amended(1)<F1>               N/A
              3(ii)   Bylaws as Amended(2)<F2>                                  N/A
              4       Instruments defining the rights of security
                      holders, including indentures                             N/A
              10.1    Settlement Agreement(3)<F3>                               N/A
              10.2    Sub-Contracting Agreement with Columbia
                      Financial  Group(6)<F6>                                   N/A 
              11      Statement re computation of per share   earnings(4)<F4>   N/A  
              15      Letter  on  unaudited   financial information(5)<F5>      N/A 
              16.1    Letter  from John M. Hanson & Company, P.C.
                      regarding change in certifying accountants(6)<F6>         N/A
              18      Letter on change in accounting principles                 N/A
              19      Report furnished to security holders                      N/A
              22      Published report regarding matters submitted
                      to vote of security holders                               N/A
              23      Consents of experts and counsel                           N/A
              24      Power of Attorney                                         N/A
              27      Financial Data Schedule                                    11
--------------------------------
<FN>
<F1>
(1)     Incorporated  by  reference to the  Exhibits  previously  filed with the
        Corporation's  Annual  Report on Form  10-K for the  fiscal  year  ended
        December 31, 1990.
<F2>
(2)     Incorporated  by  reference to the  Exhibits  previously  filed with the
        Corporation's  Annual  Report on Form  10-KSB for the fiscal  year ended
        December 31, 1994.
<F3>
(3)     Incorporated  by  reference to the  Exhibits  previously  filed with the
        Corporation's  Annual  Report on Form  10-KSB/A  Amendment No. 1 for the
        fiscal year ended December 31, 1996.
<F4>
(4)     See Part I - Financial Statements.
<F5>
(5)     See Part I - Financial Statements.
<F6>
(6)     Incorporated  by  reference to the  Exhibits  previously  filed with the
        Corporation's  Quarterly  Report on Form  10-QSB  for the  period  ended
        September 30, 1997.
</FN>
</TABLE>

        B)     REPORTS ON FORM 8-K:  None


                                           8

<PAGE>



                                      SIGNATURES

        In accordance with the  requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                            CAPITAL RESERVE CORPORATION
                                            (Registrant)

Date:   AUGUST 14, 1998                     By: /S/RALPH W. NEWTON, JR.
        ---------------                         -----------------------
                                            Ralph W. Newton, Jr.
                                            Principal Financial and Accounting
                                            Officer and President

63098.10Q


                                           9

<PAGE>


                                      Exhibit 27

                                Financial Data Schedule


                                          10

<PAGE>